Posh and City gained automatic advancement from League One last season, but while Posh are going straight back, Nigel Pearson's men are still in the hunt to maintain progress this time via the Championship play-offs.
Bidding to impress Gary Johnson, just appointed their fourth manager of the season, Posh produced the greater early threat with Tommy Rowe doing well cutting in from the right before spoiling the effort with a tame shot that City's Chris Weale gathered easily,
Sergio Torres also created problems before being blocked out, the Argentine winger then swinging over a corner with a strong header from defender Craig Morgan, back after injury, cleared from the line by Bruno Berner.
Swiss international Berner was involved at the other end as City grabbed a 41st minute lead.
Despite appearing to foul Dominic Green, referee Graham Scott allowed the former Blackburn man to go on and release veteran striker Steve Howard, who whipped in a low right footed shot that flashed through Ryan Bennett's legs to go into the net off the inside of the far post.
Howard was close to adding a second on the stroke of half-time, blasting a 25-yard drive just over the bar, yet Posh found some second period spirit with Rowe steering in a 63rd minute leveller after fine work by young substitute Ben Wright.
And goalkeeper Weale had to be at his best to go down at the feet of he ever energetic Craig Mackail-Smith as Posh stormed back on to the attack.
City quickly bounced back and were in front again three minutes later, Andy King nodding into an empty net after sub James Vaughan, on loan from Everton, headed down following a Paul Gallagher cross.